Shares of Crocs, Inc. (NASDAQ: CROX) have skyrocketed roughly 175% since the start of 2010, guided higher atop their 10-week and 20-week moving averages. In fact, the equity has bested the broader S&P 500 Index (SPX) by 30% during the past 40 sessions. More recently, the stock conquered intermediate-term resistance in the $15 region, touching a new two-year high of $15.97 in Tuesday’s trading.
What’s more, it appears the security’s recent feat has boded well for a slew of short-term options speculators. In light of the equity’s emergence north of the $15 level, call open interest at the November 15 strike depleted by almost 2,500 contracts last night – likely as a result of call holders cashing in their winning positions. Nevertheless, the 15 strike remains home to peak call open interest in the front-month series, with more than 5,000 contracts in residence.
However, just because front-month traders are taking profits doesn’t mean the options crowd has abandoned CROX’s bullpen. Instead, near-term options players are merely betting on more upside momentum for the shares by honing in on the December 16 call, which has seen almost 700 contracts opened during the past five sessions.
Nevertheless, the stock’s bullpen is far from overcrowded, as the security’s Schaeffer’s put/call open interest ratio (SOIR) of 0.73 stands higher than 67% of all others taken during the past year. In other words, near-term options traders have been more pessimistically positioned just one-third of the time during the past 52 weeks. In the same vein, short interest still accounts for 12.2 million CROX shares, or 14.7% of the equity’s float. At the stock’s average pace of trading, it would take nearly four sessions for all of these bearish bets to unwind.
In conclusion, the lingering skepticism surrounding CROX could actually work to the stock’s advantage, from a contrarian standpoint. As the shares continue their quest for new highs, an unwinding of pessimism in the options pits or a short-covering situation could add fuel to the equity’s fire.
Disclaimer: Andrea Kramer has no financial interest in any of the equities or products mentioned in this column